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| HKECIC Weekly Market News |
| 4 May 2020 |
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| Market Snapshots |
| Asia and Australasia |
Hong Kong: Exports down by 5.8% yr/yr in March
The Census and Statistics Department (C&SD) reported that the values of Hong Kong's total exports of goods decreased 5.8% yr/yr in March, after an increase of 4.3% in February. For Q1 2020 as a whole, total exports of goods decreased by 9.7% yr/yr over the same quarter in 2019. Meanwhile, decreases were registered to most major destinations, in particular the USA (-27.4%), Germany (‑26.4%), Japan (-17.9%) and Singapore (-15.5%). A government spokesman said that merchandise exports remained weak in March, while exports to the Mainland China rebounded alongside the gradual resumption of economic activities. Looking ahead, as COVID-19 has spread across the world since March and caused a severe contraction of global economic activity, Hong Kong's merchandise exports will remain under notable pressure in the near term. On a separate note, Financial Secretary Paul Chan has lowered his forecast for Hong Kong’s economic growth this year to the range of -4% to -7% from a range of -1.5% to +0.5% projected in February. He added that the epidemic would have a serious and enduring effect on the economy in light of the recent developments.
South Korea: Consumer confidence deteriorates in April
The Bank of Korea reported in its latest consumer survey that the Composite Consumer Sentiment Index (CCSI) slumped to 70.8 in April from 78.4 in March. This marks the third consecutive month of decline since February and the lowest reading since December 2008. Remarkably, all sub-indexes on living standards, household spending and domestic economic conditions went down, in a sign that South Korea’s consumer confidence continued to deteriorate amid the COVID-19 outbreak. South Korea was among the countries earliest hit by the epidemic in the world. A separate report from Statistics Korea revealed that South Korea’s retail sales – a measure of consumption levels, plunged 8% in March over the same month last year. |
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| Europe |
Italy: Fitch downgrades Italy’s credit rating to BBB-
Fitch Ratings has downgraded Italy's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BBB-' from 'BBB', with a stable outlook. The rating agency said in a statement that the downgrade reflects the significant impact of the global COVID-19 pandemic on Italy's economy and the sovereign's fiscal position. Italy is the deadliest country hit by COVID-19 after the US with over 28,000 recorded deaths. Fitch now sees Italy’s economy to shrink by 8% this year, which is in line with the government’s projection, and predicts the country’s public debt to climb to 156% of GDP from 134.8% last year. Italy has been placed in a national lockdown since 9 March to stem the spread of the epidemic. The country is set to begin easing its COVID-19 restrictions on 4 May. |
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| North America |
US: Economy shrank 4.8% in Q1
According to advance estimate released by the Department of Commerce, US GDP decreased at an annual rate of 4.8% in Q1 2020, switching from a growth of 2.1% in the preceding quarter. This marks the first negative reading since Q1 2014. The Department attributed the decline partly due to the government’s "stay-at-home" orders in response to the spread of COVID-19, which led to rapid changes in demands. Personal consumption expenditures (PCE), which accounts for about two-thirds of the total GDP, plummeted 7.6% in Q1 as most non-essential stores were closed. Meanwhile, exports and imports were down 8.7% and 15.3% respectively. Director of the US National Economic Council Larry Kudlow said that there may be additional legislation to help small businesses retain their employees, as over 30 million Americans have applied for the initial jobless claims since the beginning of the COVID-19 crisis. |
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Hong Kong-based fashion retailer Esprit Holdings Limited (HKSE: 330) announced that it has decided to close all its 56 retail stores in Asia except Mainland China by 30 June 2020 in a bid to streamline its operations due to the ongoing COVID-19 outbreak. These 56 stores represent less than 4% of the group’s total revenue for the nine months ended 31 March 2020. Esprit added that it is also negotiating with landlords across all its markets to seek rental relief, rent reductions and better terms and will terminate stores with rental terms that could not provide viable business performance.
BYD Company Limited (SEHK: 1211), a HK-listed manufacturer of automobiles, rechargeable batteries and photovoltaic business announced its Q1 2020 financial results ended 31 March 2020. Group revenue decreased 35.1% yr/yr to RMB 19.68 billion, while net profit plummeted 85.0% yr/yr to RMB 0.11 billion. BYD explained the fall in revenue was mainly due to the COVID-19 outbreak and macroeconomic downturn. For Q2, BYD expects that the impact of COVID-19 on the domestic market will gradually subside, and the automobile industry will recover steadily. However, it predicts that its photovoltaic business will come under pressure in Q2 due to the outbreak of COVID-19 in the overseas markets. |
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Hong Kong Export Credit Insurance Corporation
2/F, Tower 1, South Seas Centre, 75 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong |
| Phone：(852) 2732 9988 Website : www.hkecic.com E-mail : info@hkecic.com |
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Copyright © 2020 Hong Kong Export Credit Insurance Corporation |
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Disclaimer
The information contained in the ‘Weekly Market News’ (WMN) is compiled by the Hong Kong Export Credit Insurance Corporation ("HKECIC") for general information only. Whilst HKECIC endeavours to ensure the accuracy of this general information, no statement, representation, warranty or guarantee, express or implied, is given as to its accuracy or appropriateness for use in any particular circumstances.
HKECIC is not responsible for any loss or damage whatsoever arising out of or in connection with any information including data or programmes on the WMN. HKECIC reserves the right to omit, suspend or edit all information compiled by HKECIC on the WMN at any time in its absolute discretion without giving any reason or prior notice. Users are responsible for making their own assessment of all information contained in this WMN and are advised to verify such information and obtain independent advice before acting upon it.
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